The S&P 500 (SNPINDEX:^GSPC) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) gained 0.6% and 0.7%, respectively, today. That was enough to put the Dow at a new all-time high.

Unusually, for a day on which stocks were up, the VIX Index (VOLATILITYINDICES:^VIX), Wall Street's fear gauge, rose 3.5%, to close at 14.48. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)

Central banks rule the roost
The market took solace in the reassurances from the European Central Bank and the Bank of Japan of the central bank's commitment to accommodative policies. However, investors would do well to remember that while the Fed's stance is similar
in principle, the U.S. economy is much further advanced in its recovery than those of Europe and Japan. Therefore, the Fed will probably seek to normalize monetary policy before its counterparts.  

Which came first: sentiment or fundamentals?
Improving sentiment can bolster fundamentals and vice versa, of course. Today, the market received a boost on both fronts.

The Conference Board's Consumer Confidence Index reached its highest level in five years in May, as respondents were more upbeat about the state of the economy and the job market and the prospects for both. Meanwhile, U.S. home prices, as measured by the S&P/ Case-Shiller composite index of 20 metropolitan areas, were up 10.2% year on year in March, the highest increase since April 2006 -- just before the housing bubble peaked. At this point, there is no doubting the recovery in the housing market, which cannot but help consumer -- and investor -- confidence.

No more Moody blues for banks
The state of the banking industry was the cause of much investor anguish in the heat of the financial crisis and, intermittently, in the post-crisis era. Naturally, then, the following news item was well received by the market: Credit rating agency
Moody's Investors Service raised its outlook for the U.S. banking industry from negative to stable -- the first revision in five years.

That's right: Moody's had not altered its outlook since 2008, the year in which Lehman failed. As such, this is more of a trailing indicator than anything else, but the confirmation from Moody's that banks have "righted the ship" provides some investors with a measure of reassurance. Sure enough, financials tied with energy for best-performing sector in the S&P 500, gaining 1.01%. The two banks in the Dow, Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM), were up 0.84% and 1.75%, respectively.